FM launches currency futures trading

Mumbai, Aug 29: Union Finance Minister P Chidambaram on aturday, Aug 29 launched the first Currency Futures Trading in the country at the National Stock Exchange here.

Besides NSE, Commodity exchange MCX and BSE have received approval from SEBI to launch currency futures. Currency futures trading will see the participation of 300 eligible members at the onset of the project. More than 8,000 contracts were traded within the first few minutes of the announcement, the first of several platforms planned, with the heaviest trade on the September and October contracts, according to NSE.

Contracts would be quoted and settled in Indian rupee and the maturity of the contracts would not exceed 12 months. The futures date and price will be fixed on the purchase date.

Speaking on the occasion, Mr Chiamabram said currency futures trading would allow an investor to hedge against Forex risks.

Only US dollar-Indian rupee contracts would be allowed and the contract size will be of 1,000 US dollars and the tick size (minimum price fluctuation) will be 0.25 paisa. The prices in currency derivatives segment shall be displayed, traded and reported up to the fourth decimal place instead of up to two.

Mr Chidambaram said developing interest rate, credit derivatives and corporate bond markets was high on the agenda of the government. ''After having launched currency futures, we need to revitalise exchange-traded interest rate derivatives markets, offer exchange-traded credit derivatives and also need to strengthen the corp bond markets,'' he said, adding, ''These three products are high on the priority list of the government and I ask the government to move forward on this.''